Commenting on the quarter, Chairman, President and CEO Murray D. Martin
said, “During the quarter we reached several key milestones in the areas
of software and digital solutions that mark our progress in expanding
our value proposition beyond physical mail. As a result, we have decided
to increase our investments to bring these new solutions to market more
quickly to take advantage of emerging and growing opportunities.

“We are pleased to note that at the end of the quarter we signed a
multi-year agreement with Facebook to offer global geocoding, reverse
geocoding and other location intelligence applications / data for
integration into Facebook's applications and services. Our best of breed
technology will provide Facebook developers, and ultimately their users,
high-performance, high-precision location processing, across desktop,
laptop, tablet and mobile platforms. This is a great example of the
kinds of solutions Pitney Bowes is developing to help our customers
deliver more personalized, relevant communications to their customers.

“Our Volly™ secure digital mail delivery platform and our SMB customer
communications solutions are other examples of the solutions we are
increasing investment in and are deploying to help customers of all
sizes manage their communications in a changing communications
environment. In April, we announced a partnership in which Australia
Post will become the first national postal service to incorporate Volly
into its digital offerings. Australia Post delivers more than five
billion pieces of mail annually to more than ten million households. The
service will launch later this year. We continue to invest in Volly in
the U.S. as we move toward an initial consumer launch later this year.

“We achieved increased global sales of our Connect+™ product line in the
quarter, and are continuing to gain approval in key European markets. We
will also launch a small business cloud-connected metering solution this
month to web-enable more of our U.S. mailing customer base. We are also
partnering to integrate and expand our global ecommerce capabilities.

“We have a number of opportunities that we expect to be growth
contributors in the near future. We are stepping up our investment in
the second quarter to achieve our go-to-market goals. To pay for these
investments, we are expanding upon our productivity initiatives. We
believe that these actions will enable us to accelerate investments for
growth, while delivering expected earnings within our annual guidance
range, even in the current business climate.”

Business Segment Results

The company reports its business segments in two groups based on the
customers it primarily serves: Small and Medium Business (SMB) Solutions
and Enterprise Business Solutions. The SMB Solutions group consists of
the company’s global Mailing operations. The company aligns its SMB
business segments into North America Mailing and International Mailing
to reflect how the business is managed. North America Mailing includes
the operations of U.S. and Canada Mailing. International Mailing
includes all other SMB operations around the world. The Enterprise
Business Solutions group includes the company’s global Production Mail,
Software, Management Services, Mail Services and Marketing Services
operations.